'Humble shopkeepers': Myer boss goes back to basics to win back customers

By Patrick Hatch

12 September 2018 — 7:30pm

Myer's new boss John King has outlined his plan to return the iconic department store to growth by reclaiming "heartland Australia" and ending the company's history of "poor execution" which on Wednesday culminated in it diving to a full-year loss of almost half a billion dollars.

Mr King, marking his 100th day in the top job, warned that shareholders could be in for a bumpy ride for at least a year while Myer weaned itself off the "drug" of discount-driven sales and started selling products at prices that made it money.

Myer CEO John King said Myer would reclaim its relevance.

Photo: Supplied

Signalling a departure from Myer's previous strategy of trying to lure fashionable, high-spending shoppers, Mr King said Myer wanted to present an offer in each of its 62 stores that was tailored to local customers.

“We’re humble shopkeepers and that’s what we need to be - back down to earth, there for everyday Australians, we will have a choice of product that you will want to buy," he told Fairfax Media.

Myer's earnings have fallen for seven consecutive years and tumbled to a $486 million statutory net loss on Wednesday - its first as a listed company.

Mr King, while not giving guidance, predicted an improvement as soon as this financial year as Myer increased higher-margin in-house brands in its sales mix, removed underperforming product categories, cut rents by shrinking the footprint of individual stores, and launched a vastly improved website.

Citi analyst Bryan Raymond criticised what he said was a lack of detail around the turnaround strategy, with no specific targets set for its return to growth.

Myer's largest shareholder, Solomon Lew's Premier Investments, which has been attacking the company's for over a year, said Myer's statutory net loss of $486 million again showed its board was "an absolute disgrace".

The stock, which was floated in 2009 at $4.10 a share and has almost halved in value over the past year, fell as much as 7 per cent in early trade and closed down 4.6 per cent at 41¢.

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Mr King, who previously ran the UK department store House of Fraser and moved to Australia this year to replace the ousted Richard Umbers, was blunt in his assessment of some of Myer's previous strategies, starting with its dedicated clearance floors.

"I hate them", he said, revealing the discount floors would disappear from stores this financial year.

And after already overseeing a significant clearout of upper management at the head office in Melbourne, Mr King said Myer was still a "fat organisation", and would look to reduce back-of- house staff while increasing shop-floor workers.

Myer said that its bankers had agreed to give it more breathing room by agreeing to refinance $400 million of debt, pushing its due date out from August 2019 to February 2021.

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The lenders have also relaxed Myer's debt covenants, which it came close to breaching earlier this year as its earnings and stock value plummeted.

Myer's $486 million loss for the 2018 financial year, compared to an $11.9 million profit a year earlier, was driven by a $515 million writedown to the value of its goodwill and brand name.

Even without one-off charges, Myer's profit fell 52 per cent from $68 million last year to $32.5 million, and ran at an underlying loss in the second half. This was a result of lower gross sales, which fell $100 million to $3.1 billion.

Full-year comparable sales, which strip out the impact of closing stores, fell 2.7 per cent.